Why Is It So Important to Have Good Auto Insurance Coverage?

Is your car insured?

Most states require auto insurance for anyone who gets behind the wheel of a car. This is more than just a good idea. It is essential in protecting the driver's financial future from high medical and liability costs. Here is a brief look at why auto insurance is needed.

Function

The main purpose of car insurance is to provide the driver or owners with a source of money to cover possible costs of damage to people or property. This is very important, because one accident can result in hundreds of thousands of dollars in costs to people, their cars and other property.

Because most people do not have that kind of money, auto insurance provides such coverage. Like any kind of insurance, car insurance lets individuals share the costs of a claim with others in the same group, enabling them to get much better prices.

Types

Auto insurance has two main parts, liability and comprehensive. Liability covers things for which the driver is apt to be held liable in an accident. This includes the other person's medical bills, vehicle, and any property involved. Because lawsuits can result from an accident, the liability coverage of your auto insurance policy covers these possible expenses, up to the limits set forth in the policy.

Comprehensive auto insurance is optional in many states. When you have this part of the insurance, it will pay for damages to your car. "Uninsured motorist" covers situations in which the other driver might be at fault but lacks insurance to pay for the damage or injuries, or if her insurance is insufficient.

Size

Each driver chooses how much auto insurance he wants when he purchases it. There are minimum amounts--which you will be told about when you buy-- that are set by the state you live in, but they are rarely enough. This means you should buy recommended amounts, which your auto insurance agent will tell you about.

The limits you choose become the ceiling on how much the insurance company will pay per accident. If you have just the minimum amounts, you can almost be sure to go over it if a major accident occurs.

Considerations

Every auto insurance policy has a deductible amount. This is the money you must pay before the insurance company pays its portion of any bill. Increasing this amount can reduce your monthly insurance premiums, but you must be sure that you can afford to pay the amount if an accident occurs. If you are not able to do so, the insurer will not pay either.

Today, there are many uninsured motorists on the road. If you are in an accident with one, you could be unable to work the rest of your life and you might need a lot of medical care. If your family is in the car with you, the bills will be that much greater, not to mention that you'll no longer have a car.

Benefits

Besides covering the normal accidents, an auto insurance policy can include some excellent benefits. These can include free towing, roadside repair if your car breaks down, a temporary car while yours is being worked on, and even hotel service if you must stay overnight while it is being fixed.

Warning

Some auto insurance companies do not pay well when their customers have accidents, or they even might drop those customers altogether. Investigate insurers online carefully before you buy a policy, unless you know the insurer's name and reputation. You can check with your state's department of insurance to view their ratings.

References

• How To Buy Car Insurance